a leading indicator of profitability Bitcoin The market has just turned negative, which according to some analysts is a bearish sign. in view of of bitcoin With the latest price drop back into the $22,000 area, the 30-day simple moving average of the Average Expense Output Profit Ratio (aSOPR) recently fell below 1, as seen in the chart below presented by crypto data analytics firm Glassnode. .
it shows that Bitcoin Glassnode points out that the market is now feeling the loss of on-chain spending on average. The crypto data firm says that when aSOPR is above 1 it generally “aligns with both a healthy flow of demand (to absorb profit-taking), and more constructive opinion of the asset”.
ASOPR only considers profit/loss per output spent and not coin volume, meaning it gives equal weight to shrimp and whales, which Glassnode says is “the most comprehensive of the market”. cross-section view”. Glassnode uses the 30-day Simple Moving Average when looking at this indicator to provide a slow but high conviction market signal.
Another Key Profitability Indicator Could Soon Turn Negative
if there is a decline in Bitcoin The price rises in the coming days and weeks, as many are now likely to fear Another key indicator of profitability in the bitcoin market could also turn negative in the wake of key technical support breaks and Fed Chair Jerome Powell’s latest aggressive surprise.
The 30-day simple moving average of Glassnode’s realized profit and loss (P/L) ratio has been falling in recent days and could fall below 1.0 later this week if the current rate continues. When the actual P/L ratio is above 1.0, it “indicates that the market is now experiencing a higher proportion of USD-denominated profits than losses,” explains Glassnode.
“Unlike the aSOPR model above, this indicator accounts for the overall realized gain/loss”, continues Glassnode, before adding that this means that “larger transactors (such as whales) will have more influence than smaller ones (such as shrimp)”. “.
The on-chain picture is becoming less bullish
If the Realized P/L ratio joins ASOPR in falling below 1.0, it would mean that only five of the eight tracked by Glassnode’s analysts are on-chain and a technical indicator. “Recovering from Bitcoin Bear” Dashboard Still showing bullish sign.
In essence, the dashboard tracks eight indicators to ascertain whether bitcoin is trading above key pricing models, whether network utilization is gaining momentum, whether market profitability is returning, and whether The balance of USD-denominated bitcoin wealth favors long-term HODLers.
When all eight are flashing green, this has historically been a strong bullish sign for the bitcoin market. But, amid the recent struggles of the bitcoin market in the form of a pullback from the recent high of $25,000, the dashboard has failed to send a solid bull signal.
among ongoing macro headwinds, bitcoin bulls should tone down their optimism regarding the near-term prospects of the cryptocurrency. Yes, there are many signs that tell The bear market of 2022 is over nowGranted positions became extremely oversold last November and December. But the upside of $48,000 remains a possibility to call for a near-term rally towards the 2022 high.